Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Good morning Alf,
I am bearish and worry medium term.
Kindly keep in mind that is my duty to be unbiased. I advise several companies at both ends of this business (producers-exporters and roasters). It is my interest to be as impartial as possible when reading signals.
In fact when I am bearish I keep scanning the market in search of bullish signals and vice versa.
My bearish stance is easily explained and it is based on the order flow expectation:
I foresee producers to be heavy sellers. Colombia, Central America and Mexico, are all about to enter abundant main crops. Colombia, Honduras (and Mexico in lesser degree) are expected to have heavy flows in the coming months. You already know how difficult has been for the market to eat what Honduras is producing, Now add Colombia and Mexico for a new season of abundant offers. As I mentioned yesterday replying Tango 's question, Colombia differentials are under pressure because of that.
Then to figure out the price trajectory, one should consider who is going to absorb the selling pressure.
The first candidate, the industry (roasters) has a very passive attitude waiting for prices to fall then increasing coverage. I expect to see the industry showing interest only in a downscale, as it has been the norm.
Then you have to look to managed money as a source of buying to stop price sliding. Unfortunately, dollar is giving a macro signal of buoyancy, which is always negative to coffee price. Furthermore, with supply and demand equation moving to the oversupply, I do not see a widespread buying interest from this group. The graph that I shared above and opened this thread shows precisely this. Managed money betting is becoming less and less supportive.
Then, I kindly ask bullish ones to signal a reliable source of buying for those coffees close to show up from Honduras, Colombia and other countries.
Good Trading and Good Day.